5 September EU-Ukraine summit

Date: 11/09/1997

ALTHOUGH hardly noticed in western Europe, the first EU-Ukraine summit was a profound event for the eastern European country. Ukrainian President Leonid Kuchma's meeting with Luxembourg Prime Minister Jean-Claude Juncker, Commission President Jacques Santer and Foreign Affairs Commissioner Hans van den Broek dominated the domestic news, and was treated by the host country as a breakthrough in international relations.

“THE first Ukraine-European Union summit is a historic event,” Kuchma told journalists after the meeting. “I am particularly pleased to note that this was a dialogue between true partners, friends and, I would say, like minds, for our views on the topical problems of the present day are virtually identical.” The EU was rather less enthusiastic, complimenting Kiev on its foreign policy (pointing to its recent treaties with NATO, Russia and Romania), but criticising the slow pace of Ukrainian economic reform. Ukraine's possibilities for Union membership were not on the agenda.

ALTHOUGH Kuchma has brought down inflation from 10,000&percent; in 1993 to 20&percent; in 1997, and has liberalised prices, Ukraine's economy remains in a very serious situation. Once the bread-basket of the Soviet Union, its gross domestic product shrank by 10&percent; last year alone. Nevertheless, many structural reforms (from banking to civil administration) have been blocked since last year. Responding to EU calls for faster economic change, Prime Minister Valery Pustovoitenko told journalists the following day: “We will be able to improve all our economic and financial indicators in the nearest future.”

THE Union granted Ukraine around three-quarters of a billion ecu and affirmed its commitment to the country's long-term success. The funds include over 100 million ecu of macro-financial aid (the second tranche of a 200-million-ecu package), 100 million ecu to repair the Chernobyl sarcophagus, and a 538-million- ecu five-year package of technical aid through the Tacis programme. The Union stressed, however, that any further support would depend on continued progress in the country.

THE EU also raised a number of trade issues, calling on Ukraine to improve its investment climate and to abolish non-tariff trade barriers. In particular, it attacked “excessive certification rules and discriminatory fiscal regimes”, said a spokeswoman for Van Den Broek. That covered EU problems with Daewoo operations there, and Ukrainian ceramic tiles.

ON a more positive note, Pustovoitenko announced after the meeting that the Union would increase its quota for Ukrainian steel. Experts later suggested that the quota may go up by 50,000 tonnes a year. “We have reached full understanding on such problems as the need for a greater openness of the European Union markets to Ukrainian goods and a balance in the structure and volume of goods turnover,” Kuchma said on Ukrainian television later the same day.